By |Published On: July 17th, 2015|Categories: Uncategorized|

As the proud father of 3 kids (to include 2 daughters), this set of papers, while a bit off the wall, made me smile a bit.

In short, there seems to be a negative relationship between women and lawsuits–the more women surround an organization, the less legal trouble the organization faces.

It would be great if the relationship was 100% causal, but the data don’t fully allow the authors to make such a bold claim. Nonetheless, correlation–with some evidence for causation–is good enough for me…now I have more ammo to convince my wife we should have more kids…

Does Your Daughter Make You a Better CEO?

This paper investigates the effect of the gender of CEOs’ offspring on corporate performance. I collect a dataset of the gender of CEOs’ children and employ a firm fixed-effect model to estimate a number of positive effects of CEOs having daughters. First, acquisitions, debt and equity offerings made by CEOs with more daughters are better received by the market. Second, CEOs with more daughters are less likely to overpay the targets and better use newly raised capital. Third, CEOs’ daughter(s) decrease(s) corporate litigation risk. In sum, the gender of a child is arguably a random and natural experiment, which shows a clear effect on CEOs’ behavior.

Do Women Stay Out of Trouble? Evidence from Corporate Litigation

We use a unique hand-collected dataset on corporate lawsuits to examine the effect of female representation in top management on corporate litigation. After controlling for other important variables and accounting for endogeneity using a novel instrument, we find that firms with higher representation of women in the top management team face fewer lawsuits overall, particularly lawsuits related to product liability, environment, medical liability, labor and contracts. Among firms with higher litigation risk, greater representation of female executives positively impacts the value of cash holdings. Overall, our results uncover an important and previously unidentified benefit of gender diversity in top management.

About the Author: Wesley Gray, PhD

Wesley Gray, PhD
After serving as a Captain in the United States Marine Corps, Dr. Gray earned an MBA and a PhD in finance from the University of Chicago where he studied under Nobel Prize Winner Eugene Fama. Next, Wes took an academic job in his wife’s hometown of Philadelphia and worked as a finance professor at Drexel University. Dr. Gray’s interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management firm dedicated to an impact mission of empowering investors through education. He is a contributor to multiple industry publications and regularly speaks to professional investor groups across the country. Wes has published multiple academic papers and four books, including Embedded (Naval Institute Press, 2009), Quantitative Value (Wiley, 2012), DIY Financial Advisor (Wiley, 2015), and Quantitative Momentum (Wiley, 2016). Dr. Gray currently resides in Palmas Del Mar Puerto Rico with his wife and three children. He recently finished the Leadville 100 ultramarathon race and promises to make better life decisions in the future.